Haider-Moranis Bulletin: Why mixed-use developments get mixed reviews

Mixed-use developments that combine residential and commercial land uses have long been a favourite policy intervention for urban planners. But while such developments are known to promote sustainable modes of transportation, they may also have an adverse impact on housing affordability.

Housing affordability in mixed-use neighbourhoods is worse than in other parts of a city. If government regulations continue to promote mixed land use developments, which is the case in Ontario and several other provinces, their adverse impact on housing affordability may not be ignored.

High population density and mixed-land use are considered the quintessential tenets of good urban planning. Density, design, and diversity in land use are believed to promote travel by non-motorized modes and public transit.

Thus, the Growth Plan for the Greater Golden Horseshoe in Ontario stipulates that designated greenfield areas in large urban municipalities must be planned to achieve minimum densities of 80 residents and jobs combined per hectare.

Recent research from Canada, the United States and the United Kingdom however, identifies the hitherto ignored externalities of high-density living and the unintended outcomes of land-use restrictions.

For starters, researchers at McGill University and the University of British Columbia found that higher density living meant less happiness. They reported that the population density in the most miserable communities in Canada, on average, was eight times higher than in the happiest communities.

Interestingly, the two salient characteristics of happy communities were shorter commute times and affordable housing.

Recently published research in the Journal of the American Planning Association explored whether mixed-use neighbourhoods in Toronto offered affordable housing compared to other parts of the city as housing affordability evolved from 1991 to 2006. The research concluded that “ownership and rental housing in Toronto was generally less affordable within mixed-use zones than in areas not so zoned.”

The research also observed that housing affordability improved over time but only for high-income earners employed in management, business, technical and health-related occupations. However, for those employed in social and public sector, trades, cultural, services and manufacturing occupations, housing affordability worsened in mixed-use zones.

When it comes to housing affordability, there exists a disconnect between evidence and public policy. Often, public sector interventions to improve affordable housing are focused on urban areas where densities are high but so are land and housing prices. Thus, one gets less affordable housing per dollar when affordable housing investments are targeted at places where land is more expensive.

A study of housing affordability in Montreal and Vancouver noted that compared to the urban core, housing was more affordable in the outer zones. The study also explored the added affordability burden carried by families with children. It revealed that “couples without children had considerably more options for affordable housing.” Whereas the innermost zones of Vancouver offered no affordable space to couples with children.

The federal government has promised to spend an unprecedented $40 billion over 10 years to cut chronic homelessness by 50 per cent. The government’s National Housing Strategy promises to build 100,000 new affordable housing units, part of the goal of alleviating the housing needs of 530,000 households.

Provincial governments in Canada have also taken measures to improve housing affordability. The provincial governments in B.C. and Ontario, for instance, have imposed additional land transfer taxes on foreign and out-of-province (in B.C.’s case) homebuyers to curb the demand for housing. Such measures often achieve limited or short-term success where housing prices revert to upward climb within months if the supply side of the equation is ignored.

Restrictions on dwelling type and location, as well as minimum density thresholds, can also be a drag on new housing construction.

The latest data on seasonally adjusted housing starts show that builders broke ground on fewer new homes in May than they did in April. The decline was most pronounced for multiple-unit urban housing. Supply-side constraints also contribute to higher average rents and prices.

With billions of dollars being earmarked to improve housing affordability there is an urgent need to not ignore evidence for the unintended consequences of higher density, mixed-land uses, or targeting investments in urban core where land and housing is much more expensive.

The demand for affordable housing should be met with more supply and not just more regulations.

Murtaza Haider is an associate professor at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at www.hmbulletin.com.